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GOVERNING ONLINE GATEKEEPERS TAKING POWER SERIOUSLY by Justin NOGAREDE
GOVERNING ONLINE
GATEKEEPERS
TAKING POWER SERIOUSLY by Justin NOGAREDE
The author and foundations involved in this project would
like to thank Michelle Meagher for substantial input, and
the participants to the seminars for their constructive
feedback on the topic, in particular the following experts:
Catalina Goanta, José van Dijck, and Orla LynskeyPolicy report published in January 2021 by
THE FOUNDATION FOR EUROPEAN
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ISBN: 978-2-930769-48-6
Graphic design : Triptyque.be
The present study does not represent the views of the European Parliament Photo cover: ShutterstockTABLE OF CONTENTS EXECUTIVE SUMMARY AND RECOMMENDATIONS ................................................................................................................................... 6 INTRODUCTION .......................................................................................................................................................................................................... 10 ONLINE PLATFORMS: GATEKEEPERS OF THE DIGITAL AGE ................................................................................................................. 11 - Common infrastructure, corporate control ............................................................................................................................................... 11 - A hierarchical ecosystem of powerful actors ......................................................................................................................................... 12 - Democracy and society: negative externalities? .................................................................................................................................. 17 THE EXISTING EU POLICY FRAMEWORK ....................................................................................................................................................... 19 - Competition policy: a narrow interpretation, too widely applied .................................................................................................... 19 - The rules: sector-specific versus horizontal .......................................................................................................................................... 23 - A note on enforcement: the GDPR ............................................................................................................................................................ 28 GATEKEEPERS: AN AGENDA ................................................................................................................................................................................ 31 - The internet as infrastructure ........................................................................................................................................................................ 31 - Gatekeepers: simple and asymmetrical rules ....................................................................................................................................... 32 - Content, information and democracy ....................................................................................................................................................... 33 3 GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLY
LIST OF FIGURES
Figure 1: Google’s online consumer-facing services ................................................................................................................................. 13
Figure 2: Facebook’s online consumer-facing services ........................................................................................................................... 14
Figure 3: Big tech is eating the world? ............................................................................................................................................................. 15
Figure 4: In search of competition: Google Search’s dominance ........................................................................................................ 20
Figure 5: Of platforms, intermediaries, online marketplaces and more: recent laws affecting platforms ............................ 27
Figure 6: Budget differences EU Data Protection Authorities ............................................................................................................... 30
Figure 7: Big tech firms’ cash versus Data Protection Authorities’ budgets .................................................................................... 30
Figure 8: Facebook already monitors and tags pictures uploaded to its platform ....................................................................... 34
GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLY 4EXECUTIVE
SUMMARY AND
RECOMMENDATIONS
GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLY 6WHY SHOULD THE EU INTERVENE Furthermore, enforcement authorities have not been
IN THE BUSINESS MODELS OF sufficiently rigorous in holding big platforms to account
for their infringements of existing laws, in particular the
LARGE ONLINE PLATFORMS?
General Data Protection Regulation (GDPR). This has
In the absence of public investment and legislation, the allowed illegal business models around the collection
internet has evolved into an online ecosystem of pow- of personal data to flourish. Data protection authorities
erful and private gatekeepers that control a wide range in particular struggle to overcome the information asym-
of digital services essential for businesses, citizens and metry with regard to the largest platforms, and to match
society. These gatekeepers regulate social activity via their resources. In addition, enforcement institutions
the technical design of their services, but in ways that are scattered across the EU’s territory and across dif-
are increasingly at odds with the public interest, societal ferent domains, whereas the biggest platforms operate
well-being, and citizens’ rights. EU-wide and their business models impact on consumer
laws, data protection laws and competition laws at the
For instance, the organisation of digital services same time. This is a mismatch of weak, decentral and
according to what sells the most advertisement has sectoral enforcers and strong, centralised and multi-sec-
had large, unintended consequences for the quality of torial platforms.
public debate and the sustainability of the media. Left
unchecked, the power and mode of operation of these
gatekeepers will expand into and over public services,
such as healthcare and education, and into and over WHAT SHOULD THE EU DO NEXT?
physical infrastructure, such as mobility and the ‘smart
home’. The EU needs to ensure these infrastructures The EU needs to act now to create a new balance of
are designed to foster interoperability, data protection, power, not just in the interest of competition and innova-
transparency and ultimately democracy. tion, but to buttress the economic and political freedoms
of citizens, and to protect democracy. This requires pub-
lic investment, new and simple rules for gatekeepers,
and significantly more resources and coordinated capa-
WHY IS WHAT THE EU HAS DONE bilities for enforcement.
SO FAR NOT ENOUGH?
The EU has long relied on competition policy to regu-
late big platforms, but as they have grown in power and RECOMMENDATIONS:
metastasised across many sectors, this case-by-case
approach has become insufficient to address the scale Public investment in essential infrastructure
of the problem, and the different public values and funda-
mental rights that are at stake. · Many of the services provided by gatekeeper plat-
forms are essential infrastructure – and yet public
Since 2016, the EU has taken a sector-specific approach authorities have made little effort to shape the
towards online platforms, with the aim of aligning their design of this space, which is now characterised by
business models with the public interest. But the different ubiquitous surveillance. Remedying this situation
self-regulatory and legal initiatives lacked ambition, whilst will require public investment. The debate about
adding legal complexity. Simply put, the sector approach how and in what to invest should start swiftly, given
does not match the converging ecosystem of powerful the soon to be released 1.8 trillion EUR in public
multi-sided platforms, and self-regulation has meant that funds linked to the next EU budget and the coro-
platforms, instead of public authorities, now decide how navirus recovery fund. There are strategic choices
citizens can exercise their fundamental rights online. to be made – for instance, an EU-cloud infrastruc-
Instead, the EU should take a horizontal approach by cre- ture would require very high and sustained public
ating new rules for online gatekeepers and updating the investment, whereas a European digital identity
E-Commerce Directive of the year 2000. The latter has infrastructure could give citizens more practical
been inspired by US laws that give one-sided priority to control over their data in the short or medium term.
innovation and free speech, over other important rights
and values such as fairness, equality, media plurality,
health and safety. The harmful effects of that approach
are increasingly visible, not least in the US itself.
7 GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLYRegulation: focus on online gatekeepers’ Ensuring responsibility and media plurality
economic AND political power in the ‘automated public sphere’
· Competition policy and sector-specific approaches to ·
The EU should update the e-Commerce Directive,
regulate online platforms are not sufficient. While they which did not provide for the internet as we know it
have not managed to constrain the power of the big- today. The biggest content platforms that already use
gest online platforms, they have nevertheless created content-recognition systems for commercial purposes
a complicated environment that is difficult to navigate should be required to use these systems in the public
for smaller businesses and new entrants. The EU interest also – to automatically filter out clearly criminal
should make large platforms more responsible for content, such as child pornography. These systems
the power that they already exercise, without unwit- are not perfect and decisions should therefore be
tingly locking in their current position. The EU should subject to human review, and open to challenge at an
therefore proceed with a public law framework that independent arbitration body. Removing illegal con-
focuses only on the most powerful online platforms, tent is of course only one step, and strict follow up via
the so-called gatekeepers. This should include rules national criminal law proceedings is its necessary cor-
to limit or outlaw the widespread anti-competitive ollary. Therefore, platforms should have the obligation
practices of gatekeepers favouring their own prod- to report criminal content and to identify its source to
ucts (through self-preferencing, tying, bundling, and law enforcement, as is already the case in Germany,
the strategic use of competitors’ data). via its Network Enforcement Act.
· This new legal framework should not, however, be lim- ·
The EU cannot limit itself merely to accepting the
ited to restoring competition in the market alone. The power of big platforms to organise opinion, based
business models of online gatekeepers do not only on whatever sells the most advertisements. The EU
harm competition, but, through the use of opaque should consider additional measures to safeguard
algorithmic systems can also negatively affect con- the EU public sphere, going beyond the current rules
sumer rights and the protection of citizens’ personal for audiovisual media. This will require more trans-
data. And given the scale at which gatekeepers oper- parency from gatekeepers’, on their algorithms and
ate, such algorithmic governance affects society and advertisements. But more importantly, it will require
democracy as a whole. Putting in place behavioural institutional innovation, and the organisation of coun-
rules for gatekeeper platforms is therefore impor- tervailing powers – for example, in the form of support
tant to protect fundamental rights of individuals and for a European TV streaming and search platform that
important public values such as democracy and brings together political news and documentaries
transparency. from broadcasters across the EU, with automatic sub-
titling in all EU languages. Germany’s new Interstate
· The EU should not limit itself to regulating concen- Media Treaty provides interesting examples that
trated power in digital markets. It should also actively require social media to be more transparent about
deconcentrate digital markets, and allow alternative their algorithms, and to ensure media plurality.
business models and civil society to flourish. This
means more stringent merger control laws, and possi-
bly even reversing a few mergers. The EU should also
include an effort to assess the impact of new legisla-
tion on power dynamics. The European Commission
already analyses the impact on SMEs, but this should
be broadened to civil society and the good function-
ing of democracy. Regulators should ask themselves
whether initiatives will strengthen existing power, and
if so, how this can be remedied and how countervail-
ing powers can be spurred. This could include, for
instance, broad citizen participation in the implemen-
tation processes, or through participation, consultation
and control rights of civil society.
GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLY 8Enforcement: matching gatekeepers’
resources and reach
· The biggest online gatekeepers are highly centralised
and operate in a variety of sectors in all EU countries.
They can leverage money, data and know-how from
one sector to expand in another. In addition, their
business practices often pose problems from different
fields of law, such as competition policy, data protec-
tion and consumer rights. But the authorities that have
to enforce these rules are scattered; both across sec-
tors, and across the EU. This is a mismatch that must
be addressed by the creation of an EU-level regulator,
with broad competence.
· The new rules need new enforcement capabilities. The
EU needs to be able to intervene quickly and flexibly
to ensure data-sharing, portability and interoperability,
and to better prevent mergers in concentrated mar-
kets. Interoperability in particular can help break scale
effects in social media. It should not be precondi-
tioned on a finding of abuse of dominance, as this has
been tried and has led to endlessly drawn-out cases.
In addition, preconditioning interoperability on a find-
ing of abuse of dominance unduly narrows the scope
of enforcement, which should cover at least competi-
tion, data protection and consumer concerns.
· Furthermore, data protection authorities need to be
properly staffed, required to carry out their duties,
and prioritise enforcement against online gatekeep-
ers. Some claim that previous legislative efforts,
even successful ones as the General Data Protection
Regulation, have fortified existing power constel-
lations. But it was the lack of enforcement of data
protection rules that allowed today’s gatekeepers to
become as powerful as they are, with largely illegal
business models. If the GDPR is enforced with more
rigour against gatekeepers, this will reduce their rela-
tive power and enable a shift away from surveillance
and behavioural ads as the prevailing online business
model.
9 GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLYINTRODUCTION
Online platforms are the most powerful actors of today’s By reorganising social activity in the interest of data and
digital economy. Under the motto of ‘move fast and break value extraction, platform’s business models can have
things’, they have indeed disrupted a range of sectors. large unintended consequences for society and democ-
From the media and communications, to e-commerce racy. For example, treating information as nothing more
and labour markets, they cut out middlemen and provide than a commodity has degraded public debate by ampli-
a more direct channel between consumers and sellers, fying mis- and disinformation. This requires scrutiny, as
creators and audiences, and increasingly citizens and online platforms are expanding into delivery of public ser-
public services. vices such as healthcare and education.
Platforms have thus become powerful intermediaries Across the globe, authorities, legislatives, academia
in their own right. But not all platforms are equal. The and civil society are waking up to this fact, and are
platform ecosystem is highly centralised, with a few com- pondering action to improve the situation. Much of this
mercial actors occupying key nodes. Via the control of effort is focused on restoring competition in digital mar-
information flows, goods and services, and ranking and kets, but there are broader public interests at stake.
rating systems, these actors are able to bend entire mar- Already back in 2016, the European Commission took
kets and social systems to do their bidding. For instance, a range of actions to align platforms’ business models
when Google decides to change its search algorithm, with fairness, transparency and democracy. But four
media across the globe have to adapt their operations years later, the Commission now has little faith that
instantly.1 The sheer size and resources of these com- these rules – the effects of many of which are still to be
mercial actors also allows them to routinely skirt the law, fully felt – will be sufficient.
and simply accept the occasional fine as a cost of doing
business. Our paper evaluates existing policy from the angle of the
power that online platforms possess. It includes a few
The infrastructure platform businesses have built and con- recommendations for the EU’s planned update of the
trol is not neutral, but a means to exercise power. Their regulatory framework on the liability and responsibility of
design facilitates the collection of data, and steers the online platforms, and the new regulatory framework for
behaviour of the platform users in ways that further the the so-called ‘gatekeepers’, as well as an instrument that
aims of the platform owners. Although citizens, business would enable better enforcement of existing laws.
and workers are dependent on many of these platforms,
they have very little insight into the inner functioning of
the platforms, let alone the ability to have a say in it.
1 News & Tech (2020) ‘Google: Non-AMP content to appear in mobile top stories feature’, 23 November (https://newsandtech.com/dateline/google-non-amp-
content-to-appear-in-mobile-top-stories-feature/article_efe3ff0a-2dcb-11eb-ba26-27ddf6581409.html); Carmen Arroyo Nieto and Josep Valor (2019) ‘Google
News changes its algorithm, and with it, the media industry’, Media Matters Blog Network, Business School of Navarra, 28 October (https://blog.iese.edu/
the-media-industry/2019/10/28/google-news-changes-its-algorithm-and-with-it-the-media-industry/).
GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLY 10ONLINE PLATFORMS:
GATEKEEPERS OF
THE DIGITAL AGE
COMMON INFRASTRUCTURE, regulation.6 This is particularly visible in the e-Commerce
CORPORATE CONTROL Directive of 2000, one of the key laws shaping today’s
internet. This directive lays down minimum general rules
Many of the inventions and much of the infrastructure for services delivered on top of the physical internet
that make up today’s internet are the fruit of decades of infrastructure. One of the main provisions shields online
public investment, starting at least as early as the 1950s. intermediaries, such as website hosting providers, from
As public institutions led the effort to build the network, liability for the content they transmit, store or host.7 This is
they enforced a spirit of cooperation, in which research the so-called “platform privilege”. It was inspired by Article
findings were shared without intellectual property rights 230 of the US Communications Decency Act, which is
restrictions. It is this approach that led to the internet as now much debated in the US.
an open “network of networks”, in which any computer
and network can exchange information, based on a com-
mon “technical language”.2 BOX 1: NO PLACE FOR PUBLIC SPACE
However, when the value of the network became clear When the US decided in the 1990s to fully privatise
for citizens and businesses, the US decided to privatise the forerunner of today’s internet, Senator Daniel
the infrastructure that we know today as the ‘internet’.3 In Inouye objected. He argued that, because the US
Europe, the telecoms companies that provided part of the government funded the creation of the network,
physical network were also largely privatised, although it should reserve at least 20% of internet capac-
not unregulated.4 The EU laid down rules to liberalise and ity for non-commercial use by non-profit-making
standardise telecoms services across the EU, with the aim organisations, local community groups, and other
of creating a single market. This included common rules public benefit groups. In addition, he argued for a
on interconnection, data protection, consumer protection public fund, paid for by fees from telecoms firms,
and the quality of service. to help non-profit-making organisations and gov-
ernment users to exploit their reserved internet
But in general, the European Commission took a simi- capacity. His proposals were never accepted.8
lar ideological stance to the US, stating in 1997 that “the
expansion of electronic commerce will be market-driven”.5
Regulators took a hands-off approach towards the novel
digital applications that were coming to light, and, until
very recently, have favoured industry self- or light-touch
2 Ben Tarnoff (2016) ‘The Internet Should be a Public Good’, Jacobin, 31 August.
3 Yasha Levine (2018) Surveillance Valley. The Secret Military History of the Interne’, New York: PublicAffairs; Shane Greenstein (2015) How the Internet Became
Commercial. Innovation, Privatization, and the Birth of a New Network, Princeton: Princeton University Press.
4 Kjell A. Eliassen and Johan From (eds) (1999) The Privatisation of European Telecommunications, Aldershot: Ashgate Publishing, Chapter 1.
5 European Commission, ‘A European Initiative in Electronic Commerce’, COM(97)157.
6 See for instance European Commission, ‘Online Platforms and the Digital Single Market Opportunities and Challenges for Europe’, COM (2016) 0288. This has
never held for the ‘carrier’ side of the ‘internet’, which the EU has strongly regulated, primarily to ensure market liberalisation and integration.
7 Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market.
8 Yasha Levine, op cit, pp. 126-127.
11 GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLYWhat the European Commission did not, and perhaps A HIERARCHICAL ECOSYSTEM
could not, foresee back in 1997 was that the online envi- OF POWERFUL ACTORS
ronment would become much more critical than a mere
online shopping centre, and that the core infrastructure Some commentators state that online platforms are not
would not consist of passive hosting services. In the useful as an analytical category. They point out that
decades that followed, a new business model arose, platforms can have a variety of different business mod-
one that is uniquely placed to gather, store and process els and operate in many different economic sectors.
data from the different types of user that the internet con- In Europe, for instance, there are an estimated 7,000
nects via an online interface, or platform. Today, online active online platforms.11 In addition, different strategies
platforms have become central to the functioning of our of monetisation, for example selling advertisements as
economy, society and democracy, both on and off-line. opposed to taking a fee for each transaction, create
Platforms intermediate between communications, they very different incentives and problems.12 And yet, this
structure the search for information, enable payments, paper argues that just focusing on individual platforms
exercise a controlling influence over the media sector, and their idiosyncrasies is to lose sight of the forest by
operate e-commerce marketplaces, and are crucial for zooming in on the trees.
many workers and freelancers in the ‘gig economy’.
Economic literature highlights commonalities in the busi-
The rise of platforms challenges existing rules, which are ness models of online platforms – notably their capacity
based on clear distinctions between public and private to benefit from network effects and (close to) zero mar-
power, and commercial and social activity. For instance, ginal costs, which create ‘winner-take-all’ dynamics,13 and
by controlling essential infrastructure, some of the big- their ability to extract and leverage data from the com-
gest online platform operators are taking on roles that mercial and social interactions they facilitate.14 Although
are akin to those of public authorities. But without any this does not necessarily lead to monopolies or oligop-
of the legitimacy and safeguards that we associate with olies in and of itself, it does, however, create them in the
public authority.9 For instance, Amazon’s’ marketplace, or current economic and political environment of extensive
Apple’s Appstore, are not accurately described as market IP and trade secret protections, of a conservative inter-
players – instead, they create and control entire markets. pretation of competition policy, and of a venture-finance
They decide which producers and consumers can access ecosystem that aggressively prioritises scale.15 In a variety
their market, on what conditions, and – via algorithms of online sectors there are now one or a few powerful
– how the market operates. In addition, new online busi- providers of services such as search, social media, app
ness models on for instance Facebook and Instagram selection, ride-sharing, smartphone operating systems,
increasingly merge social and commercial activity, and online marketplaces, video-sharing, web-browsing, ads
this trend is accelerating.10 exchange, short-term home rental and more.
9 Frank Pasquale (2018) ‘New Economic Analysis of Law: Beyond Technocracy and Market Design’, University of Maryland Francis King Carey School of Law,
Legal Studies Research Paper No. 2018-17; Nicolas Suzor (2019) ‘A constitutional moment: How we might reimagine platform governance’, Computer Law &
Security Review 36.
10 Andreessen Horowitz (2020), ‘Social Strikes Back’, https://a16z.com/social-strikes-back/.
11 The European Commission estimates that Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation ser-
vices would apply to 7,000 online platforms operating in Europe (https://ec.europa.eu/commission/presscorner/detail/en/IP_19_1168).
12 Christine Caffarra (2019) ‘Follow the Money’, Concurrences No 91579, August; see also Ben Thompson, who criticises lumping ‘big tech’ together, and who
distinguishes between services that aggregate consumer demand such as Facebook, Netflix, and Google Search, and more classic platforms, such as Apple’s
control over devices and the App Store, for which it demands a fee. Ben Thompson (2015) ‘Aggregation Theory’, Stratechery, 21 July (https://stratechery.
com/2015/aggregation-theory/).
13 For the general argument on scaling effects linked to intangibles, on which many platforms rely, see Jonathan Haskel and Stian Westlake (2018) Capitalism
without Capital. The rise of the intangible economy, Princeton: Princeton University Press.
14 Nick Srnicek (2017) Platform Capitalism, Cambridge UK: Polity Press, pp. 95-97.
15 See Julie Cohen (2019) Between Truth and Power, Oxford: Oxford University Press; Frank Pasquale (2015) The Black Box Society. The Secret Algorithms That
Control Money and Information, Cambridge MA: Harvard University Press.
GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLY 12ONLINE PLATFORMS:
GATEKEEPERS OF THE DIGITAL AGE
In addition, media and communications literature also include much key online infrastructure.19 The biggest
analyses the emergence of platforms as a form of infra- platforms structure the overall ecosystem: any business
structure with common characteristics.16 While there is no that wants to operate online needs to adapt to the logic
definite classification of different types of platforms yet,17 of Google Search’s algorithm, or to the conditions set
it is clear that certain ‘super-platforms’ play a crucial role. by Apple’s App Store. While the biggest firms compete
The last decades have seen the creation of a hierarchy with each other in certain areas, they are also strategic
organised platform ecosystem, characterised by a strong partners. For instance, for the past 15 years, Alphabet has
centralisation of power. For instance, in August 2020, been paying Apple to ensure Google Search remains the
the market capitalisation of tech firms Apple, Amazon, default search engine on Apple devices. According to the
Microsoft, Facebook and Alphabet reached over US$9 US Justice Department, these annual payments now total
trillion.18 Together they own around 70 platforms, which between US$8 billion and US$12 billion a year.20
Figure 1: Google’s online consumer-facing services (source CMA)
OPERATING SYSTEM G SUITE
OPERATING SYSTEM PRODUCTIVITY
Google
Calendar
Meet
Wear OS Android Chrome OS
Google
Gmail
Translate
SAERCH AND SPECIALISED
WEB BROWSING SEARCH
Google Pixel Google Pixel
watch Pixelbook
(expected 2020)
smatphone
Chrome
Google
Shopping
Various smart Google Home
home gadget smart speaker Google
search
DEVICES Google
Travel
Google
Waze
Google Map
Youtube
Play Localised
Google search
Earth
STREAMING NAVIGATION
16 Jean-Christophe Plantin (2016) ‘Infrastructure studies meet platform studies in the age of Google and Facebook’, New Media & Society 20.
17 But see the distinction between infrastructural, intermediary, and sectoral platforms, in José van Dijck (2010) ‘Seeing the forest for the trees: Visualing plat-
formization and its governance’, New Media & Society.
18 Sergei Klebnikov (2020) ‘U.S. Tech Stocks Are Now Worth More Than $9 Trillion, Eclipsing The Entire European Stock Market’, Forbes, 28 August (https://www.
forbes.com/sites/sergeiklebnikov/2020/08/28/us-tech-stocks-are-now-worth-more-than-9-trillion-eclipsing-the-entire-european-stock-market/#4418936f3e61).
19 José Van Dijck (2018) The Platform Society. Public Values in a Connective World, Oxford: Oxford University Press.
20 NPR (2020) ‘Google Paid Apple Billions To Dominate Search on iPhones, Justice Department Says’, 22 October (https://www.npr.org/2020/10/22/926290942/
google-paid-apple-billions-to-dominate-search-on-iphones-justice-department-says?t=1606347425954).
13 GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLYFigure 2: Facebook’s online consumer-facing services (source: CMA)
Facebook
WhatsApp Instagram
shops
SOCIAL MEDIA RETAIL
Mesenger Facebook Marketplace
DEVICES STREAMING
Facebook Facebook
Portal Oculus
Gaming App Watch
GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLY 14ONLINE PLATFORMS:
GATEKEEPERS OF THE DIGITAL AGE
Figure 3: Big tech is eating the world?
40 biggest Italian firms
532,72 €
(market cap, FTSE MIB, Dec. 2020)
35 Biggest Spanish firms
546,07 €
(market cap, IBEX 35, Dec. 2020)
1 353,58 € 30 Biggest German firms
(market cap, DAX 30, Dec. 2020)
40 biggest French firms
1 794,67 €
(market cap, CAC 40, Dec. 2020)
3 345,98 € Eurozone50 biggest Eurozone firms
(market cap, EURO STOXX 50, Dec. 2020)
5 biggest US tech firms (market cap, Dec. 2020)
6 106,69 € Apple - Amazon - Microsoft - Google - Facebook
0 1000 2000 3000 4000 5000 6000 7000
Total market cap in billion EUR
The biggest online platforms pursue strategies of verti- · Amazon, while owning a huge online marketplace,
cal integration, meaning that they aim to control multiple also provides global distribution services, selling a
aspects of a particular value chain. They can also leverage wide range of its own products via its own platform,
their power in one market to gain a foothold in adjacent offering cloud services and hardware devices such
markets, increase control over customers and suppliers, as the Kindle e-reader and Alexa virtual assistant,
and make it impossible for potential competitors to enter and increasingly selling online advertisements, tra-
markets. For example: ditionally the strong suit of Google and Facebook.
The founder of Amazon also owns the Washing
· To protect its position in search, Google established Post, a key national newspaper in the US;
a dominant position in web browsing via its Google
Chrome browser, and in mobile operating sys- · Microsoft expanded beyond its Windows and Office
tems via Android, both of which come with Google software platforms, and now offers a comprehen-
Search as the default; sive cloud offering to businesses and authorities
worldwide. It is also active in the online gaming mar-
· Apple is swiftly moving beyond producing hard- ket, has its own search engine, Bing, and took over
ware devices, by expanding downstream into the the professional networking site LinkedIn.
manufacturing of chips, and by leveraging its con-
trol over the iOS operating system and AppStore The control over essential digital infrastructure enables
upstream for the selling of services such as Apple companies to engage in endemic rent-seeking: Apple
Music, News, TV, Arcade, and in the future possibly takes a 30% cut for transactions in its App Store; Google
even search; receives a cut when people search for news or products
15 GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLYonline, via control over digital advertising; and Amazon Microsoft, Amazon and Alphabet now offer cloud infra-
receives a cut for each sale made by a third-party firm structure for public administrations and universities, and
via the Amazon platform. In addition, companies use together with a few industrial giants like General Electric
their platforms to sell and favour their own products, and Huawei, they dominate ‘smart city’ markets that are
shut out competing businesses, and collect data about “rapidly evolving to integrate technology into infrastruc-
competitors and adjacent markets to expand their own ture, mobility, surveillance and security, lighting and
market share. access control, and other community-oriented areas.”25
This leaves the field of ‘artificial intelligence’ (AI) unmen-
With the resulting revenue, these big digital platform tioned. However, huge sums are invested in this, as AI
companies can stave off and neutralise any compet- is widely expected to become significant in a variety of
itive threats. Only between 2008 and 2018, and based domains. Alphabet, Facebook, Microsoft and Amazon are
on public information, Google took over 168 businesses, playing an influential role, which is likely to increase.26
Facebook 71, and Amazon 60.21 In addition, firms also buy
stakes in other digital platforms – for example, Alphabet In addition, big online platforms also aim to gain a foot-
owns stakes in ride-sharing platforms Uber and Lyft, which hold in traditional sectors that are rapidly digitising. For
both rely on a variety of services provided by Google. example, Alphabet has partnered with Swiss Re to offer
health insurance, while it is also in the process of buying
The power of large online platforms is not just confined Fitbit, a company that produces wearables for a healthy
to ‘cyberspace’. They are increasingly connected to the lifestyle. Google has also become the biggest collector
physical environment and everyday activity. Recent aca- of health and patient data in the world. Meanwhile it has
demic literature highlights the infrastructural power of also branched out into education, with nearly 70% of
big tech firms as they move into the physical realm and schools in the Netherlands, for example, already using
overlay existing infrastructure in mobility, public services Google software solutions.27 If the media sector is any
(such as education, health and electricity), supermarkets, indication, the expansion of tech firms into these sectors
robotics, and the home.22 This development is variously with very strong societal and public interests bodes ill
and loosely referred to as the Internet of Things23 or the for the future.
Next Generation Internet.24
BOX 2: EXPANSION FROM DIGITAL
TO COMMON INFRASTRUCTURE
· Alphabet has moved into autonomous driving,
via its subsidiary, Waymo
·
Amazon acquired Wholefoods to enter the
supermarket business
· Facebook is investing heavily in robotics sys-
tems and aims to create a digital currency
21 Elena Argentesi (2019) ‘Merger Policy in Digital Markets: An Ex-Post Assessment’, DP14166, Centre for Economic Policy Research, December.
22 Ganaele Langlois and Greg Elmer (2018) ‘Impersonal subjectivation from platforms to infrastructures’, Media, Culture & Society 41.
23 Arielle Pardes (2020) ‘The WIRED Guide to the Internet of Things’, WIRED, 9 November (https://www.wired.com/story/wired-guide-internet-of-things/).
24 Vincent Mosco (2017) Becoming Digital. Towards a Post-Internet Society, Bingley: Emerald Publishing.
25 SmartCitiesWorld (2018) ‘Top smart companies named in new index’, 8 March (https://www.smartcitiesworld.net/news/news/
top-smart-companies-named-in-new-index-2683).
26 CSET (2020) ‘Identifying AI-Related Companies. A Conceptual Outline and Proof of Concept’, July (see here).
27 Kaya Bouma and Liselot van der Klift (2019) ‘Google wordt steeds grotere speler op scholen, tot zorg van privacyorganisaties’, de Volkskrant, 1 November
(https://www.volkskrant.nl/nieuws-achtergrond/google-wordt-steeds-grotere-speler-op-scholen-tot-zorg-van-privacyorganisaties~bae18dcd/).
GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLY 16ONLINE PLATFORMS:
GATEKEEPERS OF THE DIGITAL AGE
DEMOCRACY AND SOCIETY: influence their users’ activities by constantly optimising
NEGATIVE EXTERNALITIES? their algorithms, and hence operations, in reaction to data
gathered about user behaviour. The exact way in which
Big tech firms are undeniably innovative. They invest vast this works is often opaque and protected by intellectual
sums in research and development and expand the fron- property rights and trade secrecy laws; but engineering
tier of technological possibility. But the digital transition is social activity to obtain the maximum data, attention, and
now increasingly synonymous with the vision of technol- ultimately money, has large consequences.
ogy and society pushed by a handful of firms, and within
those firms, a few people, such as Mark Zuckerberg for For instance, much of the social media and search envi-
Facebook, or Jeff Bezos for Amazon.28 ronment has been optimised to track citizens and gather
their data in order to predict and influence their behaviour,
It is disconcerting that one man can decide what almost and to show them the content that is most likely to cap-
1.82 billion people view on a daily basis. Such control ture their attention for the sake of maximising profits.33 By
over information flows gives content platforms the power engineering the information landscape to promote what-
to directly steer public perception in their favour, and if ever most captivates people’s attention, tech firms have
that fails, they can and do use their cash reserves to influ- degraded the quality of available information, amplified
ence policymaking.29 As a result, they operate effectively dis- and misinformation, undermined people’s capacity
operate beyond the remit of the law, and are rarely held to focus and form social relationships, and negatively
to account for the routine infringement of existing legis- affected children’s cognitive development and mental
lation and fundamental rights. However, the problem is well-being.34 Furthermore, Alphabet’s and Facebook’s
not just with the concentration of power, but also with commodification of information, and their control over
how that power is used. To quote US Law Professor Tim and capture of the bulk of digital advertising spend, has
Wu, “Silicon Valley has the engineer’s mindset of solving undermined the work of journalists and starved indepen-
one problem and let the chips fall where they may. Which dent media of revenue.35
is cool when you’re a start-up with a hundred guys, but
when you get a little bigger, not so cool.”30 This prevailing business model, of pouring billions into
the development of ‘artificial intelligence’ and data
The term platform has an ambiguous meaning and con- infrastructure to optimise the viewing and sale of online
jures up notions of architectural concreteness, neutrality advertisements, has been described as a gigantic bubble
and even equal opportunity.31 But this misrepresents the – but a bubble on which many have become depen-
reliance of digital services on user profiling, data flows and dent, and which has large negative consequences.36
algorithms.32 Platforms are not simply a fixed infrastructure Although there is debate about how effective this manip-
that allows users to communicate, buy goods, sell their ulation is, the surveillance alone already has important
labour or rent their house. Instead, platforms shape and chilling effects on citizens’ speech and autonomy.37
28 Alan Dignam (2019) ‘Artificial Intelligence. The Very Human Dangers of Dysfunctional Design and Autocratic Corporate Governance’, Queen Mary School of Law
Legal Studies, Research Paper No. 314.
29 Ingo Dachwitz and Alexander Fanta, ‘Medienmäzen Google. Wie der Datenkonzern den Journalismus umgarnt’, Otto Brenner Foundation in cooperation with
the German Trade Union Federation (DGB); Corporate Europe Observatory, ‘Big Tech Lobbying. Google, Amazon & friends and their hidden influence’, 23
September 2020, https://corporateeurope.org/en/2020/09/big-tech-lobbying; Kenneth P. Vogel (2017) ‘New America, a Google-Funded Think Tank, Faces
Backlash for Firing a Google Critic’, New York Times, 1 September.
30 Tim Wu (2018) ‘”A Decade of Cravenness”: Tim Wu on How Enforcing Competition Law Could Have Stopped Big Tech’, New York Magazine, 14 November
(https://nymag.com/intelligencer/2018/11/tim-wu-on-how-competition-law-could-have-stopped-big-tech.html).
31 The Internet Governance Forum is creating a glossary on platform law and policy terms, to provide a common language: https://www.intgovforum.org/
multilingual/content/glossary-on-platform-law-and-policy-terms.
32 Seda Gürses and Joris van Hoboken (2018) ‘Privacy After the Agile Turn’, in Jules Polonetsky, Omer Tene and Evan Selinger (eds) (2018), Cambridge Handbook
of Consumer Privacy, Cambridge UK: Cambridge University Press, pp. 579-601; Tarleton Gillespie (2010) ‘The Politics of Platforms’, New Media & Society 12, pp.
347-364.
33 Shoshana Zuboff (2019) The Age of Surveillance Capitalism. The Fight for a Human Future at the New Frontier of Power, London: Profile Books.
34 For a comprehensive list of harms, see the ‘Ledger of Harms’ maintained by the Center for Humane Technology (https://ledger.humanetech.com).
35 Jonathan Taplin (2017) Move fast and break things. How Facebook, Google and Amazon cornered culture and undermined democracy, London: Macmillan.
36 Tim Hwang (2020) Subprime Attention Crisis. Advertising and the Time Bomb at the Heart of the Internet, New York: Farrar, Straus and Giroux.
37 For a more sceptical view of the effectiveness of behavioural advertising, see Natasha Lomas (2019) ‘The case against behavioral advertising is stacking up’,
TechCrunch, 20 January (https://techcrunch.com/2019/01/20/dont-be-creepy/); Moritz Büchi (2020) ‘The chilling effects of algorithmic profiling: Mapping the
issues’, Computer Law and Security Review 36, pp. 1-15.
17 GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLYThe capacity for surveillance also leaves consumers, BOX 3: MANIPULATING HUMAN BEHAVIOUR
workers and businesses vulnerable to manipulation and TO OPTIMISE CLICK-THROUGH
coercion by platforms.38
“
Content selection algorithms on social media
In box 3, Professor of Computer Science Stuart Russell are designed to maximize click-through (…). The
explains the effects of unleashing algorithms that manipu- solution is simply to present items that the user
late human behaviour for profit in the area of social media. likes to click on, right? Wrong. The solution is to
change user’s preferences so that they become
Beyond that, big tech firms have pushed a particular form more predictable. A more predictable user can
of innovation, one that foregrounds short-term conve- be fed items that they are likely to click on (…).
nience and narrow technological solutions to complex People with more extreme political views tend to
social problems;39 and one that favours disruption over be morepredictable. Like any rational entity, the
maintenance, leading to an increasingly fragile and algorithm learns how to modify the state of its
opaque ecosystem.40 What does it mean, for instance, environment – in this case the user’s mind – in
if Google’s Android operating system breaks down, or if order to maximise its own reward.”43
Microsoft decides to discontinue its cloud and software
operations? Finally, the online ecosystem is one per-
ceived as being largely designed by young, privileged,
white males, which limit “innovation” to what they recog-
nise as promising. The perspectives of children, women
and people of colour are often not seen and therefore
left out. For instance, what does it mean that Instagram’s
algorithm subtly steers users to include nudity in their
posts?41 Should children be conditioned like that?
The key question is that posed by Dutch Professor
of Media and Digital Society José van Dijck. Looking
at the platformisation of societies, she asks “how can
European citizens and governments guard certain social
and cultural values while being dependent on a platform
ecosystem whose architecture is based on commercial
values and is rooted in a neo-libertarian world view?”42
The next section analyses why existing legislation at EU
level has been unable to answer that question effectively.
38 Shoshana Zuboff, op cit.
39 See Evgeny Morozov (2013) To save everything click here, New York: Public Affairs; and Ben Green (2020) The Smart Enough City, Cambridge MA: MIT Press.
40 Lee Vinsel and Andrew L. Russell (2020) The Innovation Delusion. How Our Obsession with the New Has Disrupted the Work That Matters Most, New York:
Currency.
41 Judith Duportail a.o. (2020) ‘Undress or fail: Instagram’s algorithm strong-arms users into showing skin’, AlgorithmWatch, 15 June (https://algorithmwatch.org/en/
story/instagram-algorithm-nudity/).
42 José van Dijck (2020) ‘Governing digital societies: Private platforms, public values’, Computer Law & Security Review 36. For a discussion on the values
propagated by Silicon Valley: Richard Barbrook and Andy Cameron (1996) ‘The Californian Ideology’, Science as Culture 6, pp. 44-72; Langdon Winner (1997)
‘Cyberlibertarian Myths and the Prospects for Community’, Acm Sigcas Computers and Society 27, pp. 14-19;.
43 Stuart Russell (2019) Human Compatible. Artificial Intelligence and the problem of control, New York: Viking Press.
GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLY 18THE EXISTING EU POLICY
FRAMEWORK
COMPETITION POLICY: A NARROW low consumer prices and market integration are the pri-
INTERPRETATION, TOO WIDELY APPLIED mary policy concerns. In the words of one commentator,
in competition policy the European “Commission has
As late as 2015, the European Commission framed its com- essentially disclaimed any role for broader public interest
prehensive digital strategy under the umbrella of the ‘digital consideration.”47 This means that for the most part, public
single market’,44 and it has relied mainly on the competition interest considerations, such as the preservation of cultural
rules to regulate digital services. However, current compe- diversity, have not been addressed under the EU competi-
tition policy has focused on a narrow concept of economic tion law framework.48
efficiency, instead of serving a variety of public goals that are
being undermined by large online platforms. Even with that This is unfortunate, because in the platform economy the dis-
more restrictive understanding of what competition policy tinction between economic and non-economic concerns is
should achieve, the toolkit of case-by-case assessments of difficult to make, and the business models of online platforms
competition in clearly defined markets has been unable to have broad public interest implications. For instance, the
preserve an open, competitive digital environment. decision who can or cannot access a gatekeeping platform
is important for traders, but also for users as citizens in a dem-
ocratic society. Platforms’ usage of algorithms to personalise
A focus on economic efficiency offers to their users may restrict consumer choice but can
also impinge on users’ autonomy in their capacity as citizens,
Originally, EU competition policy aimed to restrain mar- by using personal data to discriminate against them.49
ket power, not just in order to preserve competition, but
also because such power has negative repercussions In the literature, the need for more coherence between
on society and poses a threat to a free and democratic competition policy, consumer law and data protection
society.45 However, although EU competition policy could has been noted, and there are some signs of incremental
serve a number of public policy principles that go beyond change.50 Notably, there is the decision from the German
short-term consumer interest – such as freedom, fairness, competition authority to fine Facebook for breaching data
sustainability and even solidarity – this is not how EU com- protection rules,51 claiming Facebook’s actions constituted
petition law has typically been applied.46 an infringement of competition law as well as a breach of
data protection. But this effort is incremental and contested
Instead, under the banner of ‘the more economic approach’, in both academia and legal institutions. Right now, com-
the European Commission has essentially narrowed com- petition policy does not seem able to protect the wider
petition policy to the consumer welfare paradigm, in which concerns that stem from the power of large platforms.
44 For an extended critique of this narrow framing, and a more holistic alternative, see Centrum Cyfrowe, Commons Network and Publicspace.online (2019) ‘Vision
for a Shared Digital Europe’, April (see here).
45 Anna Gerbrandy (2019), ‘Rethinking Competition Law within the European Economic Constitution’, Journal of Common Market Studies 57, p. 129-130, 133.
46 Anna Gerbrandy (2018) ‘Conceptualizing Big Tech as “Modern Bigness” and its implications for European Competition Law’, Submission in reaction to the Call
for Contributions – Shaping competition policy in the era of digitalization’, December(https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3275235).
47 Niamh Dunne (2020) ‘Public Interest and EU Competition Law’, The Antitrust Bulletin, 26 March.
48 See for instance Katharina Hoelck’s analysis of the competition law case against Apple and international book publishers, in ‘EU Platform Regulation and its
Impact on the Media and Communication Industry’ (2016), Paper presented at the 66th annual conference of the International Communication Association (ICA),
Fukuoka, Japan.
49 Anna Gerbrandy (2018) ‘Modern Bigness’, p. 3.
50 Inge Graef, Damian Clifford and Peggy Valcke (2018)’Fairness and enforcement: Bridging competition, data protection, and consumer law’, International Data
Privacy Law 8.
51 Bundeskartellamt (2019), Facebook B6-22/16, 6 February.
19 GOVERNING ONLINE GATEKEEPERS - TAKING POWER SERIOUSLYFines as the cost of doing business for Alphabet, amounting to over €8 billion in total. The
cases concerned Alphabet’s use of its search algorithm
Under competition law, the European Commission has to favour its own Google Shopping service and to block
extensive powers to fine companies for anti-competitive advertising from rival search engines, as well as the use
conduct and order them to change their behaviour of its Android operating system to push Google Search.52
(remedies). In addition, the Commission can scrutinise
proposed mergers, and block them if they would result in The Commission’s antitrust actions against Alphabet have
significant threats to competition. nevertheless failed to change the market structure and
have not helped competitors suffering from Alphabet’s
However, the use of competition tools has not had the anticompetitive behaviour.53 Indeed, fines have not even
effects desired. To take one instructive example, over worked as a deterrent, as Alphabet’s market value has
the past decade the Commission has issued three fines only increased.54
Figure 4: In search of competition: Google Search’s dominance
GOOGLE SEARCH - MARKET SHARE EUROPE (2010-2020)
100
90 Google
80
Google fined
70 1.49 billion EUR
60
Commission investigates Google Google fined
50 Search for abuse of dominace 4.34 billion EUR
40
First official complaint Google fined
30 about Google Search 2.4 billion EUR
20
10
0
2010 2011 202 2013 2014 2015 2016 2017 2018 2019 2020 2021
Chart: Author elaboration - Source: Statcounter GlobalStats - Created with Datawrapper
52 COMP/AT.39740 Google Search (Shopping); COMP/AT.40099 Google Android; COMP/AT.40411 Google Search (AdSense).
53 See the October 2020 figures (https://gs.statcounter.com/search-engine-market-share/all/europe). In Europe, the share of Google in online search is, and has
consistently been, well over 90% over the past decade.
54 Nitasha Tiku (2019) ‘The EU Hits Google With a Third Billion-Dollar Fine. So What?’, Wired, 20 March (https://www.wired.com/story/
eu-hits-google-third-billion-dollar-fine-so-what/).
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